Corporate linkers could provide investors with an attractive inflation hedge

Utility companies

Inflation is a major concern today and investors face an uncertain trajectory, especially bond investors.

In light of this, corporate inflation-linked bonds (‘linkers') look well-positioned to mitigate the risks posed by inflation to a bond's rate of return. Corporate linkers work like their more established counterpart - government inflation-linked bonds. These instruments are designed to remove the uncertainty caused by inflation, so they provide investors with a known real rate of return. Essentially investors in linkers will receive actual inflation as opposed to expected inflation. Corporate linkers, however, will offer an additional premium, in order to compensate investors for the cre...